Icahn Builds on Stake in Motorola

Shares of Motorola (MOT Quote) were ticking higher Thursday after billionaire investor Carl Icahn disclosed that he has increased his stake in the mobile phone company.

Late Wednesday, Icahn said in a filing with the Securities and Exchange Commission that he has upped his share count to 142.36 million shares, or 6.3%, up from 5% previously. Shares of Motorola were up about 1% to $10.07.

Icahn increases his stake at a time of upheaval for the company. Late last year, Greg Brown took over as chief executive, replacing Ed Zander, who had fallen out of favor with Icahn and other shareholders, as earnings continue to disappoint.

Additionally, the company is now looking at the possibility of splintering off its handset business, which has seen its market share eroded by rivals Nokia (NOK Quote) and Samsung.

On Monday, Brown reiterated that the company is looking full-time for a leader for its handset division, but analysts say that desperate times could force the company into making the mistake of selling at the bottom instead of waiting out the storm.

"We have launched a full-time search for a leader in mobile devices," Brown said during a Morgan Stanley technology conference. He added that the announcement to either sell or spin off the mobile phone business was to "acknowledge in a public way that we understood that there is a dislocation of value to mobile devices" and was an "open and transparent way to find potential partners."

In late January, Motorola said it was exploring the spinoff. News of a potential deal initially buoyed shares, but the company's stock has fallen roughly 20% since.

If Motorola were to find a buyer for its mobile phone unit, the remainder of the company would consist of a cable set-top box operation, a wireless networking infrastructure business and a security and government services venture.

Brian Modoff, managing director and senior wireless equipment analyst with Deutsche Bank Securities, says that he sees Motorola fixing the problem first before selling the unit, although a recovery would likely take some time.

"Whoever buys [the handset unit] will essentially pay a full premium under the assumption the business is profitable," says Modoff. "There's obviously a gap between where they are now and where they expect it to be. I don't know that we'll see a sale given that [buyers] have to be willing to pay a premium that doesn't exist."

For more Icahn stock holdings, including Biogen Idec (BIIB Quote), Time Warner (TWX Quote) and Macy's (M Quote), check out the Carl Icahn portfolio at Stockpickr.com.